Employees at the St George’s University (SGU) who were previously not subjected to VAT payments due to their citizenship have lost that privilege.
The 18-month old New National Party (NNP) government of Prime Minister Dr. Keith Mitchell has passed legislation in Parliament to effect changes to the taxes and concessions granted to the university which first opened its doors in the mid-1970’s under the former Eric Gairy government.
The administration has taken steps to ensure that more non-Grenadians working at SGWU make some kind of financial contribution to the treasury.
The cash-strapped Mitchell government has approached the Washington-based International Monetary Fund (IMF) for assistance with a 3-year Structural Adjustment Programme (SAP) aimed at addressing a severe fiscal imbalance.
Known as the Saint George’s University Limited (Amendment) Order, 2014, the bill will take effect from January 2015.
The bill which was introduced by Education Minister Anthony Boatswain stipulates that any faculty member who is not citizens of Grenada will be subjected to the Income Tax Act.
According to the change such staff member will “be taxed at the rate of fifteen (15%) percent of their gross income and the same shall be deducted by the university from payment to be made to such individuals and paid into the Treasury”.
Minister Boatswain said that the amendments reflect Government’s call for shared sacrifice.
These non-Grenadian employees would now fall in line with amendments made to the Income Tax Bill in January that lowered the tax threshold payment for all workers earning between EC$36,000.00 and EC$60,000.00 to be subjected to payment of 15% income tax while those earning in excess of EC$60,000.00 to a 30% income tax.
The legislation passed in the Lower House of Parliament will also see students who occupy rooms on the SGU mega complex at True Blue subjected to 10% rate in the form of a University housing fee.
This new change to the SGU agreement with the government falls in line with legislation which came into effect this month for property owners earning more than $120,000.00 yearly to be subjected to a 10% VAT charge on their accommodation businesses.
In addition, SGU will be subjected to the payment of a 10% VAT on electricity, water, telephone, cable and internet connections, and the purchases of design, surveying and construction services relating to the construction of projects on its campus.
However, the bill excludes SGU from VAT payments on services provided by the university to its students like tuition books, activity charges, and transportation charges.
The deal worked out also provides for the university to continue to provide annual tuition-free scholarships/grants to Grenadian students that are selected by government.
With specific reference to concessions granted by government, the new arrangement will see the university continue to pay tax to government for medical supplies, equipment brought into the country.
It will also continue to make a payment of US$250,000.00 per annum to use the facilities at the St. George’s General Hospital and other health facilities on the island
The university is also mandated to contribute a minimum of US$50,000.00 per annum for projects and services to be agreed to by both sides at meetings of the Monitoring Committee.
The deal worked out calls for these sums to be increased each year, beginning March 2015 by 4% per annum.
In addition, government will grant the university exemptions from duties and taxes on the importation of motor vehicles along the following guidelines:
*50% duty and tax concessions, (including VAT) on vehicles purchased by the university for its operations and by its faculty personnel;
*100% duty and tax concessions, including Value Added Tax (VAT), on two buses purchased during the course of each calendar year.
*The university will use local suppliers to purchase motor vehicles at all times unless the vehicle sought cannot be provided by a local supplier or if the cost of said vehicle is not competitive as determined by the Monitoring Committee; and
*The concessions granted for each motor vehicle shall extend and bind that vehicle for a period of five years.
*Additionally government grants to the university 100% exemptions from duties and taxes (including VAT) on all imported materials for the operation and functioning of the university, including books, supplies, electronic equipment, computers, clothing (which clothing is limited to articles purchased for Caribbean Scholarships/Grant students, uniforms for employees and Laboratory/White Coats).
*Government also agree to grant the university 100% exemptions from duties and taxes (including VAT), on all imported construction materials for the functioning of the University until January 1, 2015 and thereafter the government hereby grants to the university 50% exemptions from duties and taxes (including VAT), on all imported construction materials.
*SGU also gets 100% exemptions from duties and taxes (including VAT) on all materials required for the Cricket Academy in addition to exemptions from the payment of all Corporation Taxes, Annual Stamp Tax, Withholding Tax, or other similar taxes.
*The exemptions granted under Article 14 shall not include Customs Service Charge.